Ireland Hoping for Deal on Bailout Repayments

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Interesting strategy to bring US /IMF support first…..Plenty of US goodwill towards and $ for Ireland. The Germans can seethe all they like…but can they bring any solutions to generate some bailout success? Ireland is the most likely to succeed afterall.

That said, it is a little too soon to try to ram another “deal” through….Understand that 2013 is short and all that. However, surely there are quieter ways of progressing and achieving this aim. The Americans are supportive (many have much to lose on Ireland)….Don’t need to crow in public to bolster that support.

As JG said in an earlier posting …”assuming it was/is a half decent deal you get crowing in the papers sh*t eating grins and way too much exuberance from the ‘paddys”…..”. Here’s one more example of that BS. Presumably some public servant or semi-state needs to justify his /her /its existence.

Corrections & Amplifications
Such a move would help ensure that the troubled euro-zone nation emerges from its bailout on schedule at the end of 2013, experts said. A previous version of this article incorrectly stated the year as 2103. [WSJ]

2103 sounds good to me!

@all

I find the tone of this article “like crazy” overly optimistic … or is it just me? OR are they all back on €zzzes reloaded?

@seafóid

the self protected upper echelon gougers appear to be immune to the Troika.

@The Troika

Get with the program on these upper echelon gougers – the suffering Citizenry demand nothing less!

@Ernie,Paul was most likely referring to those over paid employees at the NTMA.
Now,they constantly justify their exhobirant salaries and benefit packages by comparing their jobsto similar ones in the private sector.
As such they are fair game,if I am not mistaken the chap from the NTMA who coordinated the “sale”,of the BofI CoCo notes to wait for it yep BofI,jumped ship day after the sale announced.
Terrific optics way go NTMA!

@ Ernie
“a gratuitous slam on the public service.” Slamming isn’t my intention but this Govt advertisement didn’t get promoted into the WSJ by itself. How would you explain how it got in there?

The one thing can be said in favour of the PN restructure deal is that the Govt did what it wanted to do, notwithstanding no agreement from the ECB. Good. However, it’s now stupid to be publicly ramming Version 2 at the ECJ and Germans with the ink not dry on the PN deal. Modesty (above all), rationality and reasonableness would be far more appropriate and helpful to the aim of restructuring the rest of the debt.

you have to wonder at the mindset that questions why Ireland would ask for more out of a negotiation.

Isnt that basic economics – if you can get more advantage take it.

Those who suggest Ireland shouldnt dare to ask for more but should be greatful for any half baked deal think thats us being grown up. Come on OMF.

@carson – maybe reform like if you do something wrong you get sanctioned for it. Nobody did anything wrong in the free state for op years – whether thats in Schools, laundries, the church, Fianna Fail, Fianna Fail, Anglo,etc.

This is a poor article, as it puts the EFSF/EFSM maturity extensions discussions in a misleading context.

The decision in principle to extend these loans has already been taken. It has nothing to do with the prom note deal. After the Greece restructuring late last year Portugal immediately pressed hard for “equal treatment”. Naturally Ireland tagged along also. Here’s what the Portugese finance minister said in January

After a Eurogroup meeting, the Portuguese Minister of Finance Vítor Gaspar said on Monday: “We have a well-founded expectation and signal from our European partners that we can count on this support.”

Gaspar will make the same request next week before the Ecofin Council, composed of the Finance Ministers of the 27 European Union (EU) member states, about the disbursements received by Portugal through the European Financial Stabilisation Mechanism (EFSM).

Gaspar thinks that the sustainability of Portugal’s return to the sovereign debt market is hampered by Portugal facing refinancing peaks between 2014 and 2016, something that he attributes to the fact that the initial loans from the bailout programme have a very short maturity and much shorter than those being currently applied.

Ireland has about 15bn of EFSF/EFSM loans maturing in the 2015-2018 timeframe. At issue in the negotiations would be the interest rate that applies for the longer maturities. There’s also about 6bn maturing in the 2021-2022 timeframe that may also be in play. The latest tranches of EFSF/EFSM loans have been in the 20 – 30 year range, so it would not surprise me at all if the decks were cleared of all redemptions due for the next 15 years, to provide an opening for newly issued 10yr bonds, which would in effect thus be senior to the extended EFSF/EFSM loans,

I would say there is no chance that any of the IMF loans will be restructured.

The Commission has a series of informative interlinked pages on the EFSM, EFSF and ESM, the transition from one form of organisation to the other being a reflection of the crisis as it has developed. The main point of distinction with regard to the EFSM is that it is based on the EU’s capacity to borrow qua organisation and involves all 27 countries. As the crisis deepened, and the sums being guaranteed became larger and larger, the new UK government was no longer willing to see itself involved in resolving the euro crisis and, in any case, other non-euro countries – notably the new member states – were concerned about this placing limitations on their own access to EU funding.

Both the Bundesbank and the ECB have made the point repeatedly that there is a limit to what central banks can do and it is up to governments to put up the necessary cash. There should be no objections from Herr Weidmann in the circumstances should there be a decision to lengthen repayment schedules in the case of both Ireland and Portugal.

The decision-making procedures between the three organisations vary, the simplest being in relation to the EFSM (contrary to the view expressed by Cantillon) as it is based on a Regulation, the strongest form of EU legal instrument. The rules in relation to the EFSF and the ESM are spelt out in the relevant texts, the decisive characteristic of the ESM being that votes are weighted relative to the amount of capital contributions.

This complex progression of structures is largely a reflection of internal German constitutional and parliamentary difficulties.

How a country mandates its representatives to participate in decision-making procedures is a matter for them. The Bundestag appears to have suceeded in substituting decisions by it with regard to mandates for decisions by the German government. This is unusual and, indeed, the difficulties associated with it are recognised in the ESM texts by the introduction of emergency procedures.

the 40-year promissory note deal has set the benchmark for discussions.

No – it’s not a benchmark that has been “secured”. Other than agreeing that a 40 year bond is a viable market instrument, the ECB (or any EU institution) have no interest in the duration of the bond. It’s a liability of the Irish government, not of the ECB/EU.

There is a 30 year upper bound for bonds issued by the EFSM/EFSF, and while in theory they could vote to change the rules I think that is extremely unlikely.

Wringing a similar commitment out of all 27 member states to extend the maturity of EFSM loans may prove a little bit more difficult

No. The author doesn’t understand that EFSM decision-making is by qualified majority voting. It’s the EFSF where every country has an effective veto, and they have already approved the plan.

It will be interesting to see if the negative comments by Germany’s influential cadre of ex-ECB and Bundesbankers scuppers this move

No. The author appears to think that the Bundesbank have a vote in ECOFIN decisions, or that the positions of Merkel/Schauble and the Bundesbank are one and the same, which they are not.

The decision to extend the maturities beyond the first refinancing peak has already been taken. What is at issue for Ireland are the details, (e.g. the interest rates) and whether the second refinancing peak (2021-2022) will be included.

I suggest that you look a little closer to home with regard to possible errors.

The issue is a question of political choice. Does the Euro Group extend the same treatment to Ireland and Portugal as in the case of Greece. If the answer is yes, three different constituencies have to be brought on board (i) the non-EA countries involved in the EFSM (the UK in partcular) (ii) the members of the Euro Group (which includes, as you correctly point out, neither the ECB nor the Bundesbank) and (iii) the wider constituency of the IMF.

The decision-making procedures are secondary.

Cantillon has the political assessment right although he/she is a little shaky on the detail.

My own view is that a deal will be done and not because of any negotiating talent demonstrated by Irish politicians. They would not recognise a negotiating opening even it it fell on them.

In a brief intervention after the last Euro Group meeting, Regling pointed out that the EFSF and the ESM had already mobilised nearly 200 billion euros in support of Greece, Ireland, Portugal and Spain.

He implies that Weidmann’s view could “scupper” the deal, without providing any evidence and without seeming to understand the basic decision-making processes involved. Neither Wiedmann’s views or the basic characteristics of the PN deal will have come as a surprise to any ECOFIN member.

When it comes to understanding the decision-making process, the error made by the generality of commentators, it seems to me, is to ignore the overlapping nature of the various constituencies and between what is happening at an EU level and at home in terms of fulfilling the conditionality terms associated with the assistance being received. The events of the past week may have made this rather obvious to the electorate IMHO.

Politicians who persist in playing domestic politics with any element of the overall picture could usefully read the lenghty interview with Regling.

This is a question of arriving at an intelligble and agreed narrative, not about whether the policy direction being followed is the correct one. For all I know, Regling may be whistling past the graveyard. The fact that an effort is being made to further ease the associated conditionality suggests that doubts are creeping in with regard to the levels of asuterity being imposed.

But there ought to be a general consensus that the nation must get itself out of this situation of dependency and as soon as possible. That it does not yet exist is a measure of domestic failings. The hunt for scapegoats abroad should end.